Argentina Mining's Blog I Latest news on Mining in Argentina

Este blog fue creado para publicar novedades sobre la mineria en Argentina, complementando así nuestro web y presencia en redes sociales. Como todas nuestras actividades, apunta a conectar a la comunidad minera argentina y establecer un ámbito de promoción de la actividad en el mundo, generando oportunidades de negocios.
---
This blog was created to publish news on argentinean mining, thus complementing our website and presence in social networks. As all of our activities, it intends to connect the mining community in Argentina and provide a place to promote the activity in the world, developing business opportunities.

19 oct 2010

Extorre Announces Results for Cerro Moro Preliminary Economic Assessment


8 Year Mine Life - 133,500 oz/yr Gold Equivalent Average Production and US $201/oz Gold Equivalent Cash Cost/Year for First 5 Years

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 19, 2010) - Extorre Gold Mines Limited (TSX:XG) (FRANKFURT:E1R) (OTCQX:EXGMF) ("Extorre" or the "Company") is pleased to announce a favourable outcome for a Preliminary Economic Assessment ("PEA", or the "Study") for the Cerro Moro gold-silver project in Santa Cruz province, Argentina. The PEA was based on the NI 43-101 Mineral Resource Estimate released in April, 2010 and does not include potential new resources from discoveries announced after February 2010.

Highlights of the Study include the following projections:

* Total metal production of 436,000 ounces of gold and 21,400,000 million ounces of silver over 8 years
* For the first 5 years, gold production averages 76,400 ounces/year plus silver production of 3.4 million ounces/year, for an average gold equivalent production of 133,500 ounces* per year. Average cash costs on a gold equivalent* basis are US$ 201 per ounce.
* Initial capital cost: US$ 109 million (plus refundable VAT of US$ 21 million).
* Payback Period at 0% discount: 1.77 years
* After tax IRR: 43.4%
* Financial model expected to be enhanced by inclusion of US$ 30+ million of tax credits
* Conceptual development plan based on a combination of open pit and underground mining at a combined peak rate of 750t ore/day

The conceptual development plan is based on an Indicated Resource of 590,000 t (metric tonnes) at 18.9 g/t gold (grams per metric tonne) and 805 g/t silver at the Escondida vein, together with additional Inferred Resource of 1.97 Mt at 3.0 g/t gold and 190 g/t silver from the Escondida, Loma Escondida, Gabriela, Esperanza, and Deborah veins. The PEA has been prepared by Santiago-based NCL Ltda ("NCL"), together with the participation of leading industry experts.

Messrs. Yale Simpson and Bryce Roxburgh, Co-Chairmen of Extorre stated, "The Company is very pleased with the outcome for this Study. It demonstrates the capacity for Cerro Moro to produce up to 148,000 oz/yr gold equivalent*, a production rate that incorporates a silver credit equal to nearly 40% of the total metal value.

"The first 5 years of the project is designed to draw down much of the current high grade mineralization characteristic of the Escondida and Gabriela zones. Drilling on high grade discoveries/extensions such as Martina, Gabriela Southeast and Escondida Far West is ongoing, with a view to developing the resources required to maintain a 133,500 oz/yr gold equivalent* production rate through years 6-8.

"The robust economics demonstrate the value of the high grade mineralization that characterizes the Cerro Moro project."

It should be noted that this assessment is preliminary in nature as it includes mineral resources that cannot be categorized as reserves at this time and as such there is no certainty that the preliminary assessment and economics will be realized. A NI 43-101 Technical Report for the Cerro Moro PEA will be filed on SEDAR (www.sedar.com) within 45 days and be posted on Extorre's website at www.extorre.com

*Gold equivalent ounces are calculated by dividing the silver ounces by 60 and adding it to the gold value.

PEA Parameters
Parameters utilized in the Cerro Moro PEA are indicated in the table below:














Conceptual Mine Design

Mining of the relatively narrow, near-vertical gold-silver veins is expected to utilize a combination of open pit and underground methods at a peak rate of 750 t ore/day. Production is scheduled to commence simultaneously from an underground operation at Escondida Far West - Cerro Moro's highest grade ore shoot to date - together with open pit mining from the Escondida West-Central and Loma Escondida veins.

Open pit mine designs assume a maximum vertical depth of 50 m with mining being undertaken using a fleet of drill rigs (for grade control and blasting), backhoe excavators, front-end loaders, and conventional 25t trucks. The underground mining technique to be used at Escondida Far West (and beneath the remaining open pits) will be a Bench and Fill technique that requires a primary decline, stope access levels 12 m apart (with individual stopes 8 m high), ore removal using remote-controlled load haul dump (LHD) vehicles and stope infilling using a mixture of waste material from the open pits and cement. Geomechanical work completed to date has indicated that the host rocks are highly competent, allowing pit slope angles between 64 and 68 degrees, depending on local conditions, with crown pillars of 7 metres height being left between the base of the completed open pits and the subsequent underground mining operations.

Conceptual mine development for the Escondida vein area is shown at the following link: http://media3.marketwire.com/docs/1019xg.pdf

Mine scheduling studies completed by NCL have indicated that annual gold and silver production during years 1-5 could vary from 68,000 to 97,000 ounces (gold) and 2.8 million and 4.3 million ounces (silver)(or between 116,000 and 148,000 gold equivalent ounces* annually). From year 5 onwards, the conceptual mine plans include a significant proportion of lower grade gold-silver resources from the Gabriela, Esperanza, and Deborah veins, which results in lower metal production and higher operating cash costs. Extorre's current exploration activities are focused on bringing new areas of high grade mineralization into NI 43-101 compliant resources and then incorporating these into the Year 5+ mine plan.

Metallurgical tests completed on Cerro Moro ores to date have indicated high recoveries for both gold (95%) and silver (90%). The Cerro Moro plant flow sheet includes conventional crushing, a milling circuit incorporating flash flotation and gravity for recovery of coarse gold and silver minerals, individual cyanide leaching circuits for both the milling concentrate and tails, and a Merrill Crowe circuit to precipitate gold-silver dore.

Financial Model

The Cerro Moro Project has been evaluated using a cash flow analysis on a 100% equity basis, on a constant US dollar basis, and the base-case assumption of long-term gold and silver prices of $US 950 and $US 16, respectively. Cash inflows consist of expected annual revenue projections, with cash outflows such as capital, operating costs, and taxes / royalties subtracted from inflows in order to calculate net annual cash flows. The after tax value includes the payment of all taxes and royalties (5% export tax on dore, 2% NSR to Cerro Vanguardia SA, 3% "boca mina" royalty, and 35% Argentina Corporate tax on earnings). Extorre will also seek to apply for tax credits of in excess of US$ 30 million that relate to pre-mining exploration expenditures, as such credits are permissible under Argentine Tax Legislation, but not included in the PEA financial model.







Environmental Impact Assessment

The Environmental Impact Assessment ("EIA") for the Cerro Moro mine development was formally presented to Santa Cruz authorities on September 16, 2010. The EIA is currently in the process of being reviewed by local authorities, with approvals expected to be received by end-Q1, 2011.

Pre-Feasibility Study

With the positive results of the PEA in hand, Extorre will now move to the next level of confidence in the development of a mine at Cerro Moro through the completion of a Pre-Feasibility Study ("PFS"). The Cerro Moro PFS will include detailed mine design / production scheduling, process engineering and infrastructure studies, in addition to higher-precision capital (CAPEX) and operating (OPEX) cost figures, together with the reporting of a reserves estimate. In order to maximize the project NPV, additional infill drilling will also be required to upgrade our highest priority Inferred Resources to Indicated Resource category. Extorre is currently in the process of finalizing the contractual details for the PFS.

Qualified Persons Statement

Mr. Carlos Guzman, Principal Mining Engineer of NCL Ltda., Santiago, Chile, is a qualified person as defined in NI 43-101 and has read and approved the technical portions of this release.

Mr. Eric Roth, President and CEO of Extorre Gold Mines Ltd, is a qualified person as defined in NI 43-101 and is responsible for preparing the information contained in this news release.

About Extorre

Extorre is a Canadian public company listed on the Toronto Stock Exchange (symbol XG) and on the OTCQX (symbol EXGMF). Extorre's assets comprise approximately $51 million in cash, the Cerro Morro and Don Sixto projects, and other mineral exploration properties in Argentina.

On April 19, 2010, Extorre announced an updated National Instrument 43-101 compliant mineral resource estimate for Cerro Moro:

Indicated Category: 357,000 oz. gold + 15.3 million oz. silver (612,000 oz. gold equivalent*), plus
Inferred Category: 190,000 oz. gold + 12.0 million oz. silver (390,000 oz. gold equivalent*)

The 612,000 ounce gold equivalent* indicated resource, has an average grade of 32.3 g/t gold equivalent*, a grade considered exceptional by industry standards. The silver contribution is high, accounting for over 40% of the metal value. Additional inferred resources of 390,000 ounces gold equivalent* are also reported from Cerro Moro.

You are invited to visit the Extorre web site at www.extorre.com.

Safe Harbour Statement – This news release contains "forward-looking information" and "forward-looking statements" (together, the "forward-looking statements") within the meaning of applicable securities laws and the United States Private Securities Litigation Reform Act of 1995. All projections and estimates contained in the PEA, including, without limitation, estimates related to future metal prices, exchange rates, expenses, production, rates of return and net present value, as well as statements regarding the timing of its drilling programs, various studies including the PFS and the approval of the Environmental Impact Assessment and exploration results, the potential tonnage, grades and content of deposits, timing, establishment and extent of resources estimates, potential production from and viability of its properties, and permitting submission and timing constitute forward-looking statements. These forward-looking statements are made as of the date of this news release. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the future circumstances, outcomes or results anticipated in or implied by such forward-looking statements will occur or that plans, intentions or expectations upon which the forward-looking statements are based will occur. While we have based these forward-looking statements on our expectations about future events as at the date that such statements were prepared, the statements are not a guarantee that such future events will occur and are subject to risks, uncertainties, assumptions and other factors which could cause events or outcomes to differ materially from those expressed or implied by such forward-looking statements. Such factors and assumptions include, among others, the effects of general economic conditions, the price of gold and silver, changing foreign exchange rates and actions by government authorities, uncertainties associated with legal proceedings and negotiations and misjudgments in the course of preparing forward-looking information. In addition, there are known and unknown risk factors which could cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. Known risk factors include the preliminary nature of the PEA, risks associated with project development; lack of mine development and operating experience, the need for additional financing; operational risks associated with mining and mineral processing; fluctuations in metal prices; title matters; uncertainties and risks related to carrying on business in foreign countries; environmental liability claims and insurance; reliance on key personnel; the potential for conflicts of interest among certain of our officers, directors or promoters of with certain other projects; the absence of dividends; currency fluctuations; competition; dilution; the volatility of the our common share price and volume; tax consequences to U.S. investors; and other risks and uncertainties, including those relating to the Cerro Moro project and general risks associated with the mineral exploration and development industry described in our interim financial statements and MD&A for the fiscal period ended March 31, 2010 filed with the Canadian Securities Administrators and available at www.sedar.com. Although we have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. We are under no obligation to update or alter any forward-looking statements except as required under applicable securities laws.

Cautionary Note to United States Investors - The information contained herein and incorporated by reference herein has been prepared in accordance with the requirements of Canadian securities laws, which differ from the requirements of United States securities laws. In particular, the term "resource" does not equate to the term "reserve". The Securities Exchange Commission's (the "SEC") disclosure standards normally do not permit the inclusion of information concerning "measured mineral resources", "indicated mineral resources" or "inferred mineral resources" or other descriptions of the amount of mineralization in mineral deposits that do not constitute "reserves" by SEC standards, unless such information is required to be disclosed by the law of the Company's jurisdiction of incorporation or of a jurisdiction in which its securities are traded. U.S. investors should also understand that "inferred mineral resources" have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. Disclosure of "contained ounces" is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute "reserves" by SEC standards as in place tonnage and grade without reference to unit measures.

NEITHER THE TSX NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE.

For more information, please contact
Extorre Gold Mines Limited
Eric Roth
President and CEO
604.681.9512 or Toll-free: 1.888.688.9512
604.688.9532 (FAX)
or
Extorre Gold Mines Limited
Rob Grey
VP Corporate Communications
604.681.9512 or Toll-free: 1.888.688.9512
604.688.9532 (FAX)
or
Extorre Gold Mines Limited
Suite 1260, 999 West Hastings St.
Vancouver, BC Canada V6C 2W2
extorre@extorre.com
www.extorre.com

No hay comentarios:

Publicar un comentario

Thanks for your interest on Argentina Mining's Blog. Please leave your comment on this article in spanish or english. / Gracias por su interés en el Blog de Argentina Mining. Por favor deje su comentario sobre este artículo en español o inglés.